Sensex third-biggest Asian loser

Index sheds 4.46% during the quarter till Wednesday

Indian indices were underperformers compared with their Asian counterparts in the first quarter of 2005.

According to data, the benchmark Bombay Stock Exchange (BSE) Sensex is the third-biggest loser among Asian indices, down 4.46 per cent from 6,679 points in January to Wednesday's close of 6,381.40. During this period, Sensex had touched an all-time high of 6,915.09 and a low of 6,102.04.

Analysts said Indian markets are currently in a consolidation phase as investors have booked profits at higher levels and rotated into sectors geared up with the domestic economy.

"The Sensex had witnessed a sharp rally in the past 18 months, outperforming other indices and an intermediate correction was well anticipated," said an institutional equity dealer with a domestic broking firm.

Hong Kong's Hang Seng index is the biggest loser in the basket, down 5.70 per cent, followed by Shanghai Composite Index down 5.65 per cent. Taiwan Weighted Index is down 3.01 per cent, KLSE Composite down 2.89 per cent, and Thailand's SET is down 1.70 per cent since the beginning of 2005.

During the period, Nikkie 225 was up 0.42 per cent, Strait Times was up 2.56 per cent, Jakarta Composite up 6.42 per cent and Sri Lanka's ALL Share Index appreciated 15.74 per cent.

Despite the underperformance among the Asia pack, foreign institutional investors (FIIs) have been net buyers of Indian equities since the beginning of 2005. FIIs bought shares worth Rs 16,214 crore in 2005, according the Securities and Exchange Board of India (Sebi) figures.

Of this, Rs 1,245.60 crore came in January, Rs 7,823.40 crore in February and Rs 7,145.20 crore in March. The February and March figures are, however, higher because of FII buying in public offerings and also because of the Bharti Tele-Ventures block deal worth about Rs 2,440 crore.

A head of equity at a domestic broking firm said, "Indian markets are expected to attract strong inflows this year as well as the growth story still continues. Amid intermediate corrections, FII inflows are expected to be more than $8.5 billion invested last year. However, going forward the Indian markets are expected to trade more in line with global indices and an upward rally will be expected to be limited to stock specifics, he added.

Globally, the Federal Reserve's expression of concern about inflation pressures in the economy caused global investors in the weak ending March 23 to stage a widespread retreat from funds investing in riskier assets such as high yield bonds and emerging markets equities and bonds.

The emerging market equity funds tracked by EPFR posted net outflows of $761.9 million, their worst week of outflows since May 2004. The geographically diversified Global Emerging Market (GEM) Equity Funds saw outflows of $278.4 million during the week, while the Asia ex-Japan Equity Funds showed modest outflows of $52 million.

The EMEA Equity Funds, which had been receiving record-setting inflows in recent months, lost $350.2 million, while investors pulled $81.3 million from Latin America Equity Funds, the worst week of outflows for both the fund groups since May 2004.

Returns have been abysmal for these funds over the last two weeks, with Asia ex-Japan fund net asset values declining by about 4 per cent, GEM funds declining 5.7 per cent and EMEA and Latin America funds dropping 8-9 per cent.

Year-to-date, their performances are still in the positive territory, with EMEA funds rising 8.3 per cent, GEM funds up nearly 4 per cent, Asia ex-Japan funds advancing 2.4 per cent and Latin America up 0.1 per cent.